FMC allows G6 Alliance to expand scope

The Federal Maritime Commission said Wednesday it has concluded its review of the proposed amendment to the G6 Alliance Agreement and will allow the vessel-sharing agreement to expand into trade between the Far East and the U.S. West Coast, and between North Europe and all U.S. coasts.
The Commission's unanimous decision, based on a determination that the
agreement "is not likely at this time, by a reduction in competition, to
produce an unreasonable increase in transportation costs or an
unreasonable reduction in transportation service," means that the agreement can become effective Friday, as scheduled.
The G6 container carriers -- APL, Hapag-Lloyd, Hyundai, MOL, NYK and OOCL -- already share space on vessels between Asia and Europe and between Asia and the U.S. East Coast.
The decision follows a similar agreement by the FMC last month to allow Maersk, MSC and CMA CGM to to operate the so-called P3 network, a mega-alliance that will operate on the major East-West trades connecting Asia, Europe and North America.
FMC Chairman Mario Cordero said, “The Commission will continue to review the competitive impact of global alliances. This Alliance will considerably increase available capacity in the expanded geographic scope, and has the potential to generate operational efficiencies and positive environmental benefits."
Commissioner William P. Doyle noted that the amended agreement allows the G6 Alliance to encompass an additional 17 services using 180-220 container vessels with capacities ranging up to 14,000 TEU.
“I am pleased that the G6 parties have recommitted in this amended agreement to abide by the applicable laws and regulations and will maintain their separate and individual identities pertaining to sales, pricing and marketing functions,” Doyle said. “I also appreciate APL’s and Hapag-Lloyd’s commitment and support to the United States with respect to jobs and the commercial ships they have registered under the U.S.-Flag. APL has nine U.S. flag container ships and Hapag-Lloyd has five U.S. flag container ships enrolled in the U.S. Maritime Security Program in which companies agree to provide capacity needed to meet Department of Defense requirements during war and national emergencies and receive a subsidy to offset the higher cost of U.S. crew and other costs."
However, Doyle highlighted his concern that the G6 members had added “tug services” to the list of services they can discuss with port terminal facilities, marine terminal services and stevedoring services.
“Tug owners and operators should be aware of the vague language in this clause,” he said. “In any event, the G6 parties must comply with all U.S. laws should they discuss and agree upon jointly contracting for tug services. The application of this provision should require special purpose monitoring.”
He added that “The G6 parties should be mindful of the antitrust probes that are being conducted in the oceanborne transportation sector -- worldwide. To this end, the FMC will continue to monitor this alliance. Specifically, the Federal Maritime Commission will be modifying its current monitoring program to reflect the new services outlined in the amendment.”